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Healthpeak (PEAK) to Post Q3 Earnings: What's in the Cards?

Healthpeak Properties, Inc. PEAK is slated to report third-quarter earnings on Nov 1, after market close. Results are expected to reflect year-over-year growth in quarterly revenues and funds from operations (FFO) per share.

In the last reported quarter, this healthcare real estate investment trust (REIT) delivered a surprise of 2.33% in terms of FFO as adjusted per share. The performance was backed by solid top-line growth. However, weakness in the continuing care retirement communities (CCRC) portfolio was witnessed during the quarter.

In the preceding four quarters, Healthpeak’s FFO as adjusted per share beat the Zacks Consensus Estimate on all occasions, the average being 1.82%. The graph below depicts this surprise history:

Healthpeak Properties, Inc. Price and EPS Surprise

Healthpeak Properties, Inc. price-eps-surprise | Healthpeak Properties, Inc. Quote

Factors at Play

Healthpeak’s life-science real-estate portfolio is anticipated to have witnessed solid demand during the quarter to be reported on the back of the growing need for drug research and innovation. As a result, this portfolio is likely to have experienced healthy leasing activity and rent growth during the quarter.

Senior citizens constitute a major customer base of healthcare services and incur higher healthcare expenditures compared with the average population.

Healthpeak’s CCRC portfolio, which refers to its retirement communities that include independent living, assisted living and skilled nursing units, is likely to have benefited from this expenditure trend.

It has also been experiencing an improvement in occupancy levels. Per its September Investor Presentation, the August average daily census (ADC) occupancy for independent/assisted/memory care climbed 130 basis points from June’s ADC.

The above-mentioned factors are likely to have aided PEAK’s top-line performance during the quarter under preview.

The Zacks Consensus Estimate for third-quarter total revenues is pegged at $518.4 million, indicating a year-over-year rise of 7.7%.

Also, Healthpeak’s strong balance-sheet is expected to have aided the company’s asset base expansion through acquisitions, developments and redevelopments during the to-be-reported quarter.

However, higher interest rates are anticipated to have increased expenses in the third quarter.

Healthpeak’s activities during the third quarter were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the FFO per share has been unchanged at 43 cents over the past month. Nonetheless, on a year-over-year basis, it suggests growth of 7.5%.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict a surprise in terms of FFO per share for PEAK this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that’s not the case here.

Earnings ESP: Healthpeak has an Earnings ESP of -1.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks That Warrant a Look

Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:

Public Storage PSA is slated to report quarterly numbers on Nov 1. PSA has an Earnings ESP of +1.34% and carries a Zacks Rank of 3.

Extra Space Storage EXR is scheduled to report quarterly figures on Nov 1. EXR has an Earnings ESP of +1.31% and a Zacks Rank of 3 presently.

Host Hotels & Resorts HST is scheduled to report quarterly figures on Nov 2. HST has an Earnings ESP of +0.71% and a Zacks Rank of 3 currently.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report
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